The Company is Dead, But Its PayPal Billing Service Lives On

4/27/10Follow @bvbigelow

If a consumer-oriented Web-based services company goes out of business, shouldn’t its PayPal account expire too?

I’m just wondering if other online consumers have had a similar experience to Encinitas, CA, resident Judd Handler. He says he recently discovered that he had been charged $17.95 on his PayPal account for a junk-mail screening service provided through ProQuo, a San Diego-based startup that went belly up last August.

Handler says he vaguely remembers signing up for the service just over a year ago at a booth during the 2009 Earth Day festivities in San Diego’s Balboa Park. He says he hates junk mail, and signed up for what he thought was a free Web-based subscription service to block unwanted catalogs, flyers and other snail mail marketing come-ons. But ProQuo’s offer was only free for the first year. After that, the company began charging its subscribers $17.95 a year for the service, whose actual function enabled users to fill out an online form that specified the junk mail they wanted to block.

After conducting a quick online search, Handler saw that I had reported last fall on the demise of ProQuo, which had raised $15 million in venture capital before ceasing operations. He asks, “Wouldn’t you think the merchant account would be shut down?”

Good question.

As it turns out, I happen to know Bob Nascenzi, an experienced software industry executive who was hired by ProQuo’s board to unwind the business after the founding CEO departed at this time last year. Nascenzi was surprised by the story. “I don’t know where that money would have gone,” he says, “because ProQuo doesn’t exist any more.”

Good point.

Nascenzi checked with ProQuo’s former CFO and says he learned that when she was terminating the company’s business relationships last year, PayPal told her it could not cancel the ProQuo account. He says that Handler “should definitely challenge that charge, because there’s no place for the money to go.”

This particular transaction seems less interesting to me than the concept that a company might go out of business, while its billing arrangements continue to live on. PayPal has not responded to my requests for comment. I sent a couple of e-mail inquiries to Kimberly Conley and another public relations representative last week, and left a voice message for Conley again today.

We’re not consumer advocates here at Xconomy, and I’m not in a position to help anyone resolve their billing disputes with PayPal. But we are curious about just how widespread this issue might be. So add a comment below if Handler’s tale sounds all-too-familiar to you.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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